MACD signals rising bullish bias
Nifty formed a strong bullish candle as it closed at the day’s high; Volumes were still lower and below average, but they were a little better than previous day
The equity benchmarks closed at a new lifetime high with strong buying from the private-sector banks. NSE Nifty ended at 22,196.95 points, with 74.70 points or 0.34 per cent gain. Bank Nifty and FinNifty gained by 1.20 per cent and 1.23 per cent, respectively. The Media index is the top gainer with 2.27 per cent. The Nifty IT and Auto indices were the top losers, with 0.87 per cent, and 0.62 per cent, respectively. The VIX is up by 0.34 per cent to 16.07. The market breadth is slightly negative as 1,256 declines and 1,216 advances. About 160 stocks hit a new 52-week high, and 142 stocks traded in the upper circuit.
HDFC Bank, ZEEL, JioFin, and Zomato were the top trading counters in terms of value. On high voltage volatile session, the Nifty formed a strong bullish candle. It closed at the day’s high. The volumes were still lower and below average, but they were a little better than previous day. The beaten-down private sector banks led the market on Tuesday. The Bank Nifty has broken out of a Double Bottom pattern with the help of HDFC Bank’s recovery.
The Nifty was finally able to close above the 22,127 decisively. Interestingly, on a positive day, the RSI is almost flat, and the Relative Strength line is showing signs of probable outperformance. The only concern is declining volumes. Generally, during the pattern formation, volumes decline, and on a breakout, they spurt. This time, it happened in the opposite. On any condition, a low-volume breakout or a rally is not trustworthy. The market breadth is also not encouraging. The MACD histogram shows an increase in bullish momentum. The Elder’s impulse system has formed a bullish bar. The concerns of negative divergences in the indicators are also a major worry at the lifetime highs. For now, as long as it trades above the prior day’s low as a stop loss. The immediate target is 22,236 points. At the all-time highs, the volatility will increase. It is not a time of complacency.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
